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In 2012, Dallas ISD officials alleged some companies were not tutoring their students as required, like at this Apostolic Assembly church on Hume Drive. Two tutor firm owners pleaded guilty Tuesday to defrauding DISD and FWISD.

Florine Mati and David Mbugua used to run tutoring companies in the Dallas area.

On Tuesday, they pleaded guilty to defrauding the Dallas and Fort Worth school districts out of about $3 million worth of tutoring. U.S. Magistrate Judge Paul D. Stickney accepted their pleas: guilty to one count each of conspiracy to make false, fictitious or fraudulent claims. Mati and Mbugua each face up to five years in federal prison and a $250,000 fine, and they’ll have to pay restitution. They’ll be sentenced in February.

Mati, a former DISD teacher, and Mbugua formed four tutoring companies a few years ago: Diverse Learning, Wise Links (also known as Champions Mind), Boost Academy and Avenue Academy. They received state approval to tutor low-income students at schools that had failed to meet federal academic standards. The outside tutoring was required by the federal No Child Left Behind law.

The former business partners did not appear to make eye contact or talk to each other Tuesday morning, when they entered their guilty pleas in U.S. District Court. They’re being held in custody.

In a news release this afternoon, the U.S. District Attorney’s Office said:

During the course of their conspiracy, Mati, Mbugua and others submitted false claims to DISD, FWISD and other school districts in Texas, for tutoring services under the SES program that were not provided to students. They billed DISD $2,730,389, and they were paid $1,523,079. They billed FWISD $1,430,687, and they were paid $1,003,318. Approximately 75% of the total amounts billed – approximately $3,120,807 – was for services not provided. Mati and Mbugua wired some of the proceeds they received from these false claims to Kenya, beyond the reach of U.S. authorities.

The father-son owners of two Illinois-based tutoring companies, which did business with Dallas ISD in recent years, have been accused of bribing school officials in other districts, including San Antonio.

According to a federal indictment unsealed Monday, owners Johwar Soultanali and his son, Kabir Kassam, bribed school district officials with money, meals, Caribbean vacations and “services” at strip clubs. In return, school district officials in San Antonio, Corpus Christi and other states encouraged students to sign up with Babbage Net School and Brilliance Academy.

The indictment claims that the father and son bilked school districts out of $33 million.

Babbage Net School provided tutoring to Dallas ISD students who qualified for it under No Child Left Behind. According to state records, Babbage made $12.6 million in Texas in the 2009-10 school year. In Dallas, the company charged $70 an hour to tutor students and received at least $115,000 in recent years.

Dallas ISD is not mentioned in the indictment.

Court records state that Cedric Peterson, an assistant principal in San Antonio ISD, received Caribbean cruises from the owners. Another San Antonio employee, Brian Harris, received money. A Corpus Christi ISD employee is also included in the indictment. The three Texas school officials worked in their districts’ supplemental education services departments.

A 2010 study commissioned by the Texas Education Agency found that students who received tutoring with such companies did no better than students who didn’t get tutoring. However, the report found that Babbage was the only provider that showed higher reading scores for students.

Under No Child Left Behind, students from low-income families who attend a school that hasn’t met adequate yearly progress for at least one year can sign up with an SES tutor. Federal funds pay for the program.

The law prohibits school district employees from trying to encourage students to sign up with a particular SES provider.

In Dallas ISD, students could choose from dozens of tutoring companies. If Texas approved the vendor, DISD was required to allow the company to work in the district. For years, Dallas ISD called the tutoring a “racket” and tried to get an exemption from having to provide the service to students.

Texas received a waiver under NCLB last year, and education commissioner Michael Williams then decided not to require SES this school year.

Three local tutoring companies submitted fraudulent bills to the Garland and San Antonio school districts, according to state investigations.

Diverse Learning, Avenue Academy and Boost Academy sent invoices to both districts so they could get paid for tutoring low-income students, as allowed under the federal No Child Left Behind law. But the tutoring never took place, investigations by the Texas Education Agency found. A lawyer for Diverse Learning said the company is contesting TEA’s decision. Messages left Academy and Boost have not been returned.

TEA had already removed Avenue Academy and Boost Academy (which have the same Hurst address) from the state’s approved list of tutoring companies for other violations. A related company called Diverse Learning (also known as Diverse Links) was removed April 4. In addition, a Coppell firm called 1 to 1 Computer Tutoring was removed April 2.

But those tutoring firms are free to reapply to get back on the state list this fall. And some school district leaders say that’s not cool.

“What we want is the ability to permanently remove companies from the list that have a history of fraud,” said Leslie Price, a spokeswoman for San Antonio ISD. She said SAISD spends a lot of time and money documenting problems with tutoring companies, only to have them potentially remain in business.

“There is a serious problem here,” Price said. “Students are not getting the services they need, and monies are not being used in the best way.”

As a state agency, TEA cannot prohibit companies from re-applying, spokeswoman DeEtta Culbertson said. But the agency will consider a company’s past sanctions or investigations when reviewing future applications.

San Antonio ISD filed a complaint in February alleging that Avenue, Boost, Diverse Learning and three other tutoring firms had sought a total of $280,000 for tutoring that never actually happened. The district’s own investigation found cases where students were asked to sign blank forms to receive tutoring, along with a free “learning tool” like a tablet or laptop computer. District officials said students told them they received little or no tutoring, and not on the dates or times the companies claimed.

Garland ISD lodged similar complaints against Avenue, Boost and Diverse Learning in February. GISD officials said students were told to sign their names several times, often with different dates and times, only to not be tutored. They haven’t given an estimate of how much fraudulent billing occurred. Based on the hourly tutoring rates (Diverse charges $80, Avenue and Boost charge $70), the companies sought as much as $1,800 per student.

Diverse Learning was one of the state’s top tutoring providers in 2011-12, receiving more than $2.1 million for working with almost 2,200 students statewide. Dallas ISD has also accused the company of submitting phony invoices. Last year, Diverse Learning sued DISD, saying the district refused to pay $1.4 million for legitimate tutoring services.

Under No Child Left Behind, poor students in struggling schools are eligible to receive free tutoring in math and reading. Parents choose a company from the state list, and the company bills the school district. Complaints have mounted against the tutoring program, also called supplemental educational services, and TEA’s commissioner has sought to make participation voluntary.

We reported today that the Texas Education Agency booted two Hurst companies from the state’s approved list of tutoring providers. TEA determined that the companies, Avenue Academy and Boost Academy, provided false taxpayer identification numbers in their applications last year.

The education agency is still investigating other complaints against those and other tutoring businesses. I’ve posted copies of complaints that Dallas, Garland and San Antonio ISDs sent recently to TEA. Below those, you’ll find Boost Academy’s responses to TEA about getting kicked off the state list.

Several school districts around Texas have complained about the tutoring, also known as supplemental education services, that are required under the federal No Child Left Behind law. New TEA Commissioner Michael Williams recently asked the feds to let Texas get out of the tutoring requirement. Several states have made the same request. In Florida, the tutoring industry has successfully fought back. The tutoring lobby has been active here in Texas, too.

Matthew Haag & I wrote Sunday about DISD’s frustrations with a tutoring program required under the No Child Left Behind law. Twenty-six DISD schools must offer the tutoring, also called Supplemental Educational Services, to poor kids. DISD said they’ve found evidence of fraudulent billing by at least two SES providers. Beyond that, district officials say, they see little evidence that the tutoring actually helps, given all the money spent on it.

Here’s what Patricia Burch, a researcher at the University of Southern California, had to say:

The SES program is a good idea in principle. It is a good idea to use Title I funds to provide more instruction as needed to kids whose families might not be able to afford private tutors. But much of the design of the policy is all wrong. There’s not enough teeth in it to make sure it lives up to its promises — by that I mean quality after school tutoring.

Burch, along with UT-Austin researcher Carolyn Heinrich, is leading a four-year study of the tutoring program, focusing on Dallas ISD, Austin ISD, and three other urban school systems outside Texas. You can learn more about their work and prior research here.

Texas Education Agency officials say they’re looking at ways to improve their oversight of the tutoring program. Steve Pines of the national Education Industry Association holds up Florida as a promising model. Florida doesn’t just look at scores on its big state test. It uses other tests to measure what students learn while being tutored, and it looks at how often students attend tutoring sessions, whether they complete the tutoring program, and more. The state gives each tutoring group a letter grade.

“Texas’ reliance on a single data point from the TAKS misses the mark, especially when much of the tutoring is delivered after the spring test and the effects are not captured,” Pines said, echoing a concern we heard from some local tutoring providers.

Texas does not publish individual tutor ratings. The closest thing would be tutoring scorecards that were part of an independent 2010 study commissioned by TEA. We published scorecards for some of the state’s biggest providers, after requesting the info from TEA.

Meanwhile, you can read DISD’s recent report on the tutoring program below.